Home Health Prospective Payment System Update and Redesign: Part Deux?

July 10, 2018

In the home health proposed payment rule released July 2 (Proposed Rule), the Centers for Medicare & Medicaid Services (CMS) continues its efforts to alert on six proposed Medicare payment updates to put “patient-centered care over paperwork” and prioritize “value over volume.”

Home Health Prospective Payment System (HH PPS) Redesign

Following sharp industry criticism of the agency’s calendar year (CY) 2018 home health proposed payment redesign, the Home Health Groupings Model (HHGM), which was estimated to cost providers nearly $1 billion in reimbursements, CMS ultimately decided not to finalize the proposal. HHGM included case-mix methodology refinements and a change in the unit of payment from a 60-day episode of care to a 30-day period of care. In the Proposed Rule, CMS offers a refurbished HHGM, now renamed the Patient-Driven Grouping Model (PDGM) in recognition of what CMS describes as a more patient-driven approach to payment. The PDGM is in many ways similar to the HHGM proposed in CY 2018; however, in accordance with requirements in the Bipartisan Budget Act of 2018 (BBA of 2018), the PDGM is to be implemented in a budget-neutral way effective January 1, 2020.

The PDGM approach requires use of the 30-day period of care and eliminating the use of therapy service thresholds and placing patients into meaningful payment categories based on clinical characteristics and other patient information. The PDGM includes 216 payment groupings that result from combinations of classifications for 30-day periods in the following five categories:

  • Timing Classifications – “early” or “late” depending on when they occur within a sequence of 30-day periods. Only the first 30-day episode would qualify as “early”
  • Admission Source – “community” or “institutional” depending on what healthcare setting was utilized in the 14 days prior to home health
  • Clinical Grouping – based on the principal diagnosis, patients would be placed in one of six clinical groupings, including (a) musculoskeletal rehabilitation; (b) neuro/stroke rehabilitation; (c) wounds- post-op wound aftercare and skin/non-surgical wound care; (d) complex nursing interventions; (e) behavioral health care; (f) medication management, teaching, and assessment
  • Functional Levels – a patient’s level of function would be designated as low, medium, or high based on Outcome and Assessment Information Sets (OASIS) items such as grooming, bathing, and transferring
  • Comorbidity Adjustment – based on the secondary diagnoses reported by the home health agency (HHA) on the home health claim form, the adjustment is broken out into three levels (no, low, and high) which, depending on category, can increase payment by up to 20%

CMS identifies certain anticipated behavior assumptions that would be taken into account in calculating proposed payment amounts, including that (1) HHAs will change their documentation and coding practices to put the highest paying diagnosis code as the principal diagnosis code in order to have the period placed into a higher-paying clinical group; (2) the number of co-morbidity adjustments (claims form allows for more to be listed than does OASIS) would increase overall payments; and (3) low-volume cases would receive more visits. CMS also solicits comments on the elimination of the split payment approach considering the shorter periods of care.

Citing recent stakeholder concerns regarding the provision of home health care for Medicare patients with chronic, complex conditions, CMS reiterates that outlier payments could provide payment to HHAs for those patients with higher resource use and that the patient’s condition does not need to improve for home health services to be covered by Medicare.

CMS commits to providing additional resources to better evaluate the proposed PDGM, including (1) Home Health Claims-OASIS Limited Data Set (available upon request); (2) report on a technical expert panel’s recommendations on the proposal (estimated to be available no later than April 1, 2019); and (3) PDGM grouper to determine case-mix weights.

CY 2019 Payment Update

The Proposed Rule outlines CY 2019 payment updates that are estimated to yield $400 million (a net 2.1% increase) in increased payments to home health agencies. A net increase of 2.1% includes a 2.7% market basket update, productivity adjustment of -0.7%, 0.1% increase in high-cost outlier payments, and 0.1% decrease in payments due to the new statutorily mandated rural add-on methodology. The BBA of 2018 requires CMS to classify rural counties into one of three categories (high home health utilization, low population density, and all others) and vary the CYs 2019–2022 add-on payments based on counties’ category classification.

Infusion Therapy

The Proposed Rule solicits comments related to the CY 2021 implementation of the new home infusion therapy benefit category, as established by the 21st Century Cures Act. The benefit covers the professional services including nursing services furnished in accordance with the plan of care, patient training, and education (not otherwise covered under the durable medical equipment benefit), remote monitoring, and monitoring services for the provision of home infusion therapy and home infusion drugs furnished by a qualified home infusion therapy supplier. As required by the BBA of 2018, the Proposed Rule would establish temporary transitional payments for certain home infusion therapy services in CYs 2019 and 2020. Additionally, the Proposed Rule offers health and safety standards for home infusion therapy including requirements for the plan of care to be initiated and updated by a physician; seven-day-a-week, 24-hour-a-day access to services, and remote monitoring; and patient education and training regarding their home infusion therapy care. These standards would provide the framework for CMS to establish an accreditation and oversight process for home infusion therapy suppliers.

Home Health Quality Reporting Program (HH QRP)

CMS invites comment on its proposal to replace the six criteria currently used when considering a quality measure for removal with the seven measure removal factors currently adopted in the other post-acute care quality reporting programs (LTCH QRP, IRF QRP, and SNF QRP) in addition to a new measure removal factor 8 (costs outweigh the benefit). For CY 2021, CMS proposes to remove the following seven quality measures from the HH QRP:

  • Depression Assessment Conducted
  • Diabetic Foot Care and Patient/Caregiver Education Implemented during All Episodes of Care
  • Multifactor Fall Risk Assessment Conducted for All Patients Who Can Ambulate
  • Pneumococcal Polysaccharide Vaccine Ever Received
  • Improvement in the Status of Surgical Wounds
  • Emergency Department Use without Hospital Readmission during the First 30 days of Home Health
  • Rehospitalization during the first 30 days of Home Health

Additionally, CMS clarifies that not all OASIS data currently collected would be required for the HH QRP beginning in CY 2020. CMS estimates the cost impact related to OASIS item collection as a result of the updated data collection processes for the PDGM and proposed changes to the HH QRP are estimated to result in a net $60 million in annualized cost savings to HHAs beginning in CY 2020.

Home Health Value-Based Purchasing Model (HHVBP)

CMS proposes to remove two OASIS based process measures (Influenza Immunization Received for Current Flu Season and Pneumococcal Polysaccharide Vaccine Ever Received) for CY 2019. Additionally, CMS would replace three measures (Improvement in Bathing, Improvement in Bed Transferring, and Improvement in Ambulation-Locomotion) with two composite measures (Total Normalized Composite Change in Self-Care and Total Normalized Composite Change in Mobility). CMS also proposes to reweight the measures used in the HHVBP Program (OASIS-based, claims-based, and HHCAHPS measures) to give more weight to claims-based measures in the hopes of incentivizing improved provider performance for those measures.

Remote Patient Monitoring

Referencing studies that tout the positive impact seen from allowing patients to share more real-time data with their providers and caregivers, CMS encourages providers’ use of new technology to expand such practices. Advancing the administration’s MyHealthEData initiative, CMS proposes to recognize the cost associated with “remote patient monitoring” as an allowable administrative cost on the Medicare cost report form. CMS defines “remote patient monitoring” as the collection of physiologic data (for example, ECG, blood pressure, glucose monitoring) digitally stored and/or transmitted by the patient and/or caregiver to the HHA.

Reduced Administrative Burden

CMS is proposing to eliminate the requirement that the certifying physician estimate how much longer skilled services would be needed when recertifying the need for continuing home health care, as the information is already gathered on a patient’s plan of care. Additionally, CMS moves to align regulations and subregulatory guidance to allow medical record documentation from the HHA to be used to support the basis for certification and/or recertification of home health eligibility, provided certain requirements are met.

Comments are due no later than August 31, 2018.


If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following Morgan Lewis lawyers:

Washington, DC
Howard Young
Jacob Harper

Banee Pachuca